India’s retail inflation rose to 3.93% in May, according to government data released on Friday. The main reasons for this were the increase in prices of food items and fuel. Additionally, the ongoing conflict in the Middle East is putting upward pressure on prices, creating inflation uncertainty. The May figures were slightly below estimates of 4.0% and remained close to the central bank’s medium-term inflation target.
**Fuel prices increased four times in May**
The inflation data was released at a time when state oil companies raised fuel prices four times in May alone, pushing up transportation costs. Meanwhile, food inflation rose to 4.78% in May, higher than last year’s low and 4.20% recorded in April.
**Increase in transportation related inflation**
Transport-related inflation rose to 1.75% in May – a reversal of the 0.01% decline seen in April – reflecting the impact of higher retail fuel prices. On concerns of higher oil prices and weak monsoon, the Reserve Bank of India has raised its inflation forecast for the current fiscal year to 5.1% from 4.6%; Besides, risks related to rupee and current account deficit have also increased.
**What has become expensive?**
First, fuel prices increased; After petrol and diesel, the prices of commercial gas cylinders increased, which had a huge impact on businesses. After this, the prices of everyday essentials also increased. Milk and bread prices rose, and recently domestic gas cylinder prices were increased by ₹29. This increase has badly affected the household budget of the common man.
